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Hong Kong (HK) property developers including New World Development (NWD), CK Asset, Hang Lung and Hongkong Land with relatively sizeable China exposures are facing headwinds due to the slowdown in China, as per SCMP. The HK developers are grappling with a combination of rising interest rates, an economic slowdown, and an inventory build-up. Weakening residential transaction volumes in recent months have doused hopes of a sustained recovery. In the second quarter of 2023, the stock of unsold residential units rose to 19,085, the highest since 2003, according to Centaline Property Agency. Historically, HK property has benefited from years of low US interest rates and strong Chinese growth, but fortunes are in reverse gear now. In its latest note, Jefferies trimmed the earnings estimates of Hong Kong developers across the board, citing margins, higher interest expenses and the yuan depreciation, which factor in the sizeable mainland exposures of some of these companies.
NWD’s 4.125% 2029s fell by 2 points to 76.5 cents to the dollar to yield 9.41%.
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